Cyber-attackers initially compromised RSA Security with a phishing email exploiting a zero-day Adobe vulnerability,
Coviello disclosed in March. The company declined to specify exactly
what had been stolen but acknowledged it was "information relating to
the SecurID technology."

"RSA clearly knew what was breached to begin with
and what the implications were and they didn't do anything about it,"
Bobby Kuzma, president of Central Florida Technology Solutions, a
security solutions provider, told eWEEK.

RSA should have replaced the tokens immediately,
not waited until after three major defense contractors were attacked,
Kuzma said. The company had a duty to its clients to disclose "any
material defects in the solution," according to Kuzma.

The SecurID two-factor authentication technology
relies on a pseudo-random number that is generated every 30 to 60
seconds. Users have to enter their own username, self-selected password
and the code displayed on the token. The authentication server knows
what number was generated. Attackers also now know how to figure out
what number is being generated, and it is easy to steal usernames and
passwords using phishing or keyloggers, Kuzma said.

Jittery customers had wondered whether the March
attack on RSA Secyruty meant SecurID was no longer secure, and many of
them were already discussing replacing the tokens or switching to a
different authentication system, according to Kuzma, a CISPP (Certified
Information Systems Security Professional).

"We've had four customers call us to implement
alternate solutions this morning," Kuzma said. The customers included
financial services, medical firms and a firm that worked with the
Department of Defense.

Kuzma is planning to move customers to Cryptocard,
a "smaller niche competitor" to RSA with a similar technology that give
customers more control over how the authentication codes are generated.

Despite writing in the letter that the replacement
program would be for "for customers with concentrated user bases
typically focused on protecting intellectual property and corporate
networks," Coviello told The Wall Street Journal the company was ready
to replace the tokens for "virtually every customer we have." There are
an estimated 40 million SecurID tokens currently in use.

Replacing those SecurID tokens can potentially
cost an estimated $1.30 per token, Avivah Litan, a distinguished
analyst at Gartner, told eWEEK. The costs include direct costs of the
token as well as indirect costs such as overhead, support and shipping.
If RSA winds up replacing all of them, the replacement cost would rise
to approximately $52 million.

In the letter, Coviello stated RSA would "work
with all customers to assess their unique risk profiles and user
populations and help them understand which options may be most
effective and least disruptive to their business and their users."

Lockheed plans to replace all of its SecurID tokens, according to the Journal.

RSA Security remains "highly confident in the RSA
SecureID product," but Coviello acknowledged in the letter that the
recent Lockheed Martin attack and general concerns over hacking, "may
reduce some customers' overall risk tolerance."

The attack on Lockheed is the only one that RSA
Security has confirmed thus far as having used the stolen SecurID
information. While L-3 executives have said the attackers used cloned
SecurID tokens, RSA Security is still investigating those incidents.

RSA believes that only defense industry customers
are vulnerable to attackers. "The fact that the only confirmed use to
date of the extracted RSA product information involved a major U.S.
defense contractor only reinforces our view on the motive of this
attacker," wrote Coviello.

The company hasn't publicly disclosed the cost of
the security breach. For its most recent financial quarter, ended March
31, RSA group's gross margins dropped from 67.6 percent to 54.1
percent, year-over-year, parent company EMC said, blaming the drop on
the attack.